HIT to Receive $15 Million from RC2 in Product Recall Agreement

OAK BROOK, July 7: RC2 has agreed to pay HIT Entertainment
$15 million in exchange for being released from indemnification claims
following last summer’s recall of Thomas & Friends toys.

Last June, RC2 announced the recall of 1.5 million Thomas-based wooden railway toys due
to lead poisoning concerns. Two months later, the company recalled an
additional 200,000.

As part of its deal with HIT, RC2 has also received an
extension to the license term on the Thomas & Friends Wooden Railway product line,
along with an immediate reduction in licensing payments to HIT for the
merchandise. It has also shortened the license term on the Take Along Thomas
& Friends
die-cast product line.

According to an RC2 statement, the agreement also “clarifies
that there are no contractual restrictions related to the development of toy
products for Chuggington,” a new preschool train property from Ludorum, the outfit founded by
former HIT chiefs Charlie Caminada and Rob Lawes. An RC2 company, Learning
Curve Brands, is a partner on the series, which has been licensed to BBC
in the U.K., Super RTL in Germany, TF1 in France and ABC in Australia, among
others.

—By Mansha Daswani